Thanks to the U.S. Department of Labor, millions of Americans will soon qualify for overtime pay. The agency is finalizing “The Overtime Rule,” which will require that all anyone who draws a salary of less than $47,476 annually ($913/week) must be paid time-and-a-half for any hours they tackle beyond a 40-hour workweek. The current threshold is just $23,660. The change puts 4.2 million people on track to earn overtime pay, starting December 1, 2016. The threshold will then increase every three years, based on overall wage growth.
The Bureau of Labor Statistics reports that in the first quarter of 2016, the median earnings for White full-time wage and salary workers was $857 per week. Blacks made $673, Hispanics made $612 and Asians made $1,032.
“People are going to get at least one of three benefits,” Labor Secretary Tom Perez told NPR. “They’re either going to get more money … more time with their family, or everybody is going to get clarity.” Indeed, the Labor Department posting on the rule makes it clear that employers can respond in one (or a mix) of three ways:
- Pay time-and-a-half for overtime work
- Raise salaries above the threshold
- Limit hours to 40 per week
“Our whole mission here is about strengthening and growing the middle class,” Perez said. “In order to do that, we need to ensure that middle class jobs pay middle class wages.”
The Administration draws its authority for the rule from the Fair Labor Standards Act, which “establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.” Today, it only provides about 7 percent of salaried workers with overtime protection. When the new threshold kicks in, it will cover closer to 35 percent.
Critics are pushing Congress to block the rule, but President Barack Obama would be expected to use his veto power in that instance. “What our members have told us, what many other employers have told us, is there’s not a golden pot of money out there sitting in employers’ pockets where they can all of a sudden pay a lot more overtime pay,” David French, vice president of the National Retail Federation, told NPR. “Instead, they’re going to make the rational change and they’re going to change jobs.”